Lancashire firm Bowland Financial Management collapsed when it was discovered that adviser Kevan Ian Berry had been pocketing client cash.
After Berry was jailed for four years, the firm lost its FSA authorisation because of PI errors uncovered after the fraud. It was driven into liquidation and declared in default by the Financial Services Comp-ensation Scheme.
Director John Nixon, who spent 38 years building up the business, has been forced to hand over clients since he is no longer allowed to do business. He estimates the business has lost 850,000.
After Berry pleaded guilty in court last year to six counts of stealing monies, one of attempting to steal and four of procuring a valuable security by deception, the PI insurer for Bowland argued that it should not meet the costs for client claims as a PIA fine against the firm in 1997 was not declared on the most recent policy, despite being declared previously. The FSA held Nixon responsible and removed authorisation from the firm and him.
Nixon says: “This should send out a message to any IFA firm out there. A clever individual could try to get away with a fraud and the person who runs the firm could be to blame. You get punished if you do not know everything.”